Losing sheen

The recent violence in Varachha and Kapodra areas was in fact the eruption of the discontent that has been simmering for long. With recession in the diamond industry, several workers were laid off and the skilled ones had to take up jobs on a salary far below what they once used to get.

To add to the problems, no diamond unit, irrespective of its size, follows labour laws. Leave aside regularising employees, many of the small units are not even registered. Employers argue that labour laws have no scope in their trade as it depends heavily on international demand. The labour department has done precious little to make the units follow laws.

An estimated 2.5 lakh workers are employed in Surat’s diamond polishing industry. More often than not, deals exist only on tiny chits or are simply by word of mouth. Outsiders were made to understand that the trade relies on `faith’. So, the traders have failed to come to terms with the explosion of discontent. “The violent fallouts are simply inexplicable,” says regional convenor of Gem and Jewellery Export Promotion Council Chandrakant Sanghavi.

The trade is dominated by Kathiawaris, the inhabitants of the Saurashtrian peninsula, who migrated in droves to Surat. The migration began in 1955 and about seven lakh Saurashtrians have made Surat their home.

While the textile industry employs workers mostly from Orissa, Andhra Pradesh, Madhya Pradesh and Maharashtra, diamond is a forte of Kathiawaris; both merchants and workers. A strong community feeling exists among workers as most belong to the same caste — Leuva Patels. In most cases, workers are known to the employer, in fact that is a criterion for employment.

The industry is dependent on international trade — and subject to fluctuations and factors beyond India’s control. The country’s claim to the industry is because of its labour-intensive nature. Surat deals mostly in small diamonds and cheap varieties to cater to the lower end of the market.

Merchants owning more than 100 `ghantis’ (machines) in Surat are less than five per cent, it is the small-time employer who has characterised the trade here.

Over-production has been the bane of the industry. The demand at its peak saw merchants hikingwages and increasing production to make quick money. Slump in demand and crisis in the Far East and Middle East, have left merchants in no position but to cut wages, says K.D. Vaghani, secretary of Saurashtra Patel Seva Samaj, a voluntary organisation.

Vaghani — like many other merchants — claims that only a handful of employers reduced wages, and that too not more than 15 per cent. Merchants claim workers have over-reacted.

But the fact is that big merchants are to be blamed for bringing the situation to such a pass. In a bid to smother small units and to step up their production, they lured workers with higher wages. Now that the demand has come down, they want workers to pay for it. At one point of time, many units offered an initial salary of Rs 5,000 to a diamond cutter, the lowest in the rung.

So when profit margins reduced either due to devaluation or other factors, workers became the casualty. Merchants’ explanation is casual. “We paid high wages when demand was at its peak, why can’t workerstake reverses in their stride,” says a merchant.

Workers, however, refuse to buy merchants’ theory of recession. “How come they spend crores on marriages, drive fancy cars, employ managers drawing Rs 15,000 a month or open new units?” they say.

It’s not the first time that attention has shifted to the working conditions in the industry. The industry had a hard time tackling the accusation of employing child labour — a stick the US had used to pass sanctions against India. Even when the Labour Department undertook a survey to flush out child labour following a Supreme Court directive, employers managed to save their neck, either by chucking out children or packing them off to Saurashtra for an unexpected holiday.

But last week’s violent incidents have turned the spotlight again on the industry. Assistant Labour Commissioner D.K. Patel told the Minister of State for Home, Manibhai Patel, that the labour officials were prevented from inspecting units by merchants. Once police protection was assured, Patel cracked the whip on a dozen-odd big units.

The scene has begun to change. The Dakshin Gujarat Kamdar Sangh, affiliated to INTUC, is slowly making inroads into the industry and has moved the labour court and the Gujarat High Court seeking a directive to these units to follow labour laws.

“It’s time the government enforced the Minimum Wages Act,” says director of Indian Diamond Institute K.K. Sharma. Reluctantly though, the merchants agreed to restore wages as they stood on December 31, 1997, but not before the intervention of the police department, Home Ministry and the Labour Department.

But the problems facing the industry are far from over. If the spectre of glut was its own making, the $4.3-billion Indian diamond industry has been done in by instability in the supply of rough. Recently, diamond cartel De Beers decided to discontinue propping up the price of small diamonds by stocking up when the Indian industry was cosying up to its main supplier of small diamonds, Australian major Argyle Diamonds, which parted ways with De Beers in June 1996. In fact, even before June 1996, Russia and Angola were offloading goods clandestinely at very low prices. All of which kept the industry on tenterhooks.

“The industry should diversify into value-added jewellery as it is the only solution for its survival, reeling under recession for the past five-six years,” says Dilip Shah, the head of Department of Rural Studies of South Gujarat University. The industry has a future only if it gets organised, gets out of the cottage-industry mindset and cuts down on production while ensuring at the same time its surplus stock of exportable diamonds are disposed off at reasonable rates. If it doesn’t, the problems — and the labour unrest — will continue to haunt Surat.